University considers market-driven fund for college savings

Posted: Thursday, September 14, 2000

FAIRBANKS (AP) -- The University of Alaska is exploring the possibility of creating a savings plan that would allow parents to save for their child's college tuition in a fund that would invest in the stock market.

The university is accepting proposals from financial management institutions through October 6.

''We're trying to do a premier program,'' said Linda Milliken, the program manager. ''Hopefully, we'll get an investment firm that comes in, takes us national and makes it big.''

The fund would capitalize on recent state and federal legislation that gives tax breaks to families with children in college.

Currently, the University of Alaska has a plan that allows parents to pre-pay tuition.

Under the proposed market-driven fund, money invested could be used at any university or for vocational education and could be used for room and board, not just tuition.

If savings plan investors choose not to use the money for the original beneficiary, the beneficiary can be changed or the money can be withdrawn from the account with a 10 percent penalty against any earnings.

''Our ultimate goal is to make college affordable for all the kids in the state, get the kids to come to the University of Alaska and get kids to finish college,'' Milliken said.

The proposed savings plan would perform much like a mutual fund with several investment options available, ranging from aggressive to conservative. But unlike the advance tuition program, neither principal nor earnings would be guaranteed.

University officials say the plan must be approved by the full board. UA Associate Vice President Jim Lynch hopes to have a manager and plan in front of the regents this winter, perhaps as soon as the November meeting.